PAYMENT CARD SETTLEMENT OPPORTUNITY
SETTLEMENT UPDATE (July 2016)
On Thursday, June 30th, the U.S. Court of Appeals for the 2nd Circuit issued its long-awaited decision regarding the Payment Card Settlement.
The decision vacated the district court’s certification of the class action and reversed the previous final approval of the Settlement. It was remanded back to the U.S. District Court for the Eastern District of New York to further proceedings consistent with the content and guidelines set forth in the 2nd Circuit’s decision.
In basic terms, it simply means we are still on hold while we continue to wait and see what the parties do next in the proceedings.
By remanding back to the District Court, it implies that the parties will submit a new proposed Settlement with slightly different terms that fits within the guidelines laid out in the 2nd Circuit’s Decision. At this time, our professional opinion is that the settlement funds will remain the same, or even increase. To us, it is just a matter of the timing.
Though this news may appear to be bad news, it remains to be seen what the end result will be and, more importantly, how this will affect the amount and/or timing of payout for your members’ claim(s). However, since the settlement may be revived, potentially with amended terms, your members may still enroll in Class Action Capital’s service. Class Action Capital will honor all enrollments received to date and any received in the future. If the parties are able to move forward with a claims process, the timing of such process is unknown. Class Action Capital will not have any guess as to when a claims process may occur until the court releases further updates, and we will update all client members accordingly.
WHAT IS THIS SETTLEMENT ABOUT?
The proposed settlement resolves allegations over whether Visa, MasterCard, and their respective member banks violated the law by setting interchange fees (charged to businesses every time a customer pays with a Visa or MasterCard) and then made and enforced rules that prohibited merchants from steering customers to other payment methods, resulting in merchants paying excessive fees to accept for payment from customers Visa and MasterCard cards. On December 13, 2013 the Court overseeing this class action granted final approval to the settlement. Also on December 13, a number of merchants submitted notices to the Court that they plan to appeal. The settlement will not become final until all appeals have been resolved. Bottom line is companies that accepted Visa or MasterCard credit or debit cards for payment from customers anytime since 2004 are likely eligible to recover a share of the settlement funds.
HOW MUCH SETTLEMENT MONEY IS AVAILABLE AND HOW EACH CLAIM CALCULATED?
Provided any appeals have been resolved and the settlement has become effective, valid claimants will be eligible to receive payments after all claims have been processed. Payments will be related to two different funds: a Cash Settlement Fund and an Interchange Fund. These funds will be used to pay valid claims filed, the costs of class administration and notice, money awards to Class plaintiffs, and attorneys’ fees and expenses approved by the Court.
The first fund is a Cash Settlement Fund. The Cash Settlement Fund consists of $6.05 billion, reduced by 25% to account for merchants who excluded themselves from the Cash Settlement Class. The amount of money each eligible claimant will receive from the Cash Settlement Fund will depend on the total dollar value of all valid claims filed, the costs of class administration and notice, money awards to Class Plaintiffs, and attorneys’ fees and expenses approved by the Court. It is anticipated that the amount paid to each valid claimant from the Cash Settlement Fund will be based on the claimant’s actual or estimated interchange fees attributable to the claimant’s Visa and MasterCard transactions from January 1, 2004 through November 28, 2012.
The second fund is an Interchange Settlement Fund which could total up to $1.2 billion. The amount of money each eligible claimant will receive from the Interchange Fund depends on the money available to pay all claims, the total dollar value of all valid claims filed, the cost of class administration and notice, and attorneys’ fees and expenses approved by the Court. Each claimant’s payment will be paid in proportion to all claimants’ payments. For a merchant that submits a valid claim, the amount paid from the Interchange Fund will be based on one-tenth of 1% of the merchant’s Visa and MasterCard credit card transaction volume during the eight-month period from July 29, 2013 through March 29, 2014.
IS YOUR COMPANY ELIGIBLE FOR A PRO RATA SHARE OF THE SETTLEMENT FUND?
This case involves two Settlement Classes. Both Class definitions include individuals, businesses and other entities who accepted Visa-Branded Cards and/or MasterCard-Branded cards in the United States since January 1, 2004.
The Cash Settlement Class (or “Rule 23(b)(3) Settlement Class”) consists of all persons, businesses, or other entities that accepted Visa-Branded Cards and/or MasterCard-Branded Cards in the United States at any time from January 1, 2004 to November 28, 2012.
WHAT DATA DOES YOUR COMPANY NEED TO PROVIDE TO CAC?
Required: Company Legal Name, DBA(s), EIN(s), Location Addresses, Monthly or yearly (actual/estimated) Visa/MasterCard volume
Helpful: Current and Past Payment Processing Vendor Names, Current and Past Merchant IDs with each vendor, Historical Monthly Processing Statements
WHO ARE THE DEFENDANTS?
- Visa U.S.A. Inc., Visa International Service Association, Visa Inc., etc.
- MasterCard International Incorporated, MasterCard Incorporated, etc
- Bank of America, N.A.; BA Merchant Services LLC (formerly known as National Processing, Inc.); Bank of America Corporation; MBNA America Bank, N.A., and FIA Card Services, N.A.
- Barclays Bank plc; Barclays Bank Delaware; and Barclays Financial Corp.
- Capital One Bank (USA), N.A.; Capital One F.S.B.; and Capital One Financial Corporation.
- Chase Bank USA, N.A.; Chase Manhattan Bank USA, N.A.; Chase Paymentech Solutions, LLC; JPMorgan Chase Bank, N.A.; JPMorgan Chase & Co.; Bank One Corporation; and Bank One Delaware, N.A.
- Citibank (South Dakota), N.A.; Citibank N.A.; Citigroup Inc.; and Citicorp.
- Fifth Third Bancorp.
- First National Bank of Omaha.
- HSBC Finance Corporation; HSBC Bank USA, N.A.; HSBC North America Holdings Inc.; HSBC Holdings plc; and HSBC Bank plc.
- National City Corporation and National City Bank of Kentucky.
- SunTrust Banks, Inc. and SunTrust Bank.
- Texas Independent Bancshares, Inc.
- Wachovia Bank, N.A. and Wachovia Corporation.
- Washington Mutual, Inc.; Washington Mutual Bank; Providian National Bank (also known as Washington Mutual Card Services, Inc.); and Providian Financial Corporation.
- Wells Fargo & Company and Wells Fargo Bank, N.A.
THE BOTTOM LINE IS WE WORK TO BEST POSITION EACH CLIENT’S RECOVERY FROM A SETTLEMENT WHILE MINIMIZING A CLIENT’S TIME, USE OF INTERNAL RESOURCES AND THE RISK OF MISTAKE IF THE CLIENT WERE TO TAKE ON CLAIMS MANAGEMENT ON ITS OWN.